Question 1 (3 points)

Randy had two term policies to compare with costs as shown below. Calculate the NPV at a 6 percent after-tax discount rate. Which one should she select and why?

Year	A	B
1	$225	$300
2	$275	$310
3	$350	$320
4	$400	$330
5	$500	$340

NPV of Policy A =

(Round your answer to the nearest whole dollar. Omit the comma, +/- sign, and "$" sign in your response)

NPV of Policy B =

(Round your answer to the nearest whole dollar. Omit the comma, +/- sign, and "$" sign in your response)

Which one should she select?

(Enter "Policy A" or "Policy B" in the block below)

Question 2 (3 points)

Question 2 options:

1) Given the following information:

Guaranteed Contract Premium	Guaranteed Death Benefit	Projected Dividend	Projected Cash Value	Term Premium	Life_Premium Minus Term_Premium and Dividend	Cash_Flows
$2,300	$200,000	0	0	$325	???	???
$2,300		0	0	$330	???	???
$2,300		0	0	$335	???	???
$2,300		0	$3,500	$340	???	???
$2,300		$250	$6,000	$355	???	???
$2,300		$400	$9,000	$370	???	???
$2,300		$600	$12,000	$390	???	???
$2,300		$750	$15,000	$400	???	???
$2,300		$900	$18,000	$410	???	???
$2,300		$1,000	$24,000	$430	???	???

(a) Find the return (Internal Rate of Return) on the whole life insurance policy when the cost of term is included.

(Round your answer to the nearest 2 decimals, i.e. "3.56" " 4.11" or "12.93". Omit the "%" sign in your response)

(b) Which policy would you select if you can invest the difference between the term and whole life policies